Nathaniel Erskine-Smith is the Liberal MP for Beaches-East York.
By NATHANIEL ERSKINE-SMITH
In these uncertain times, the federal budget was modest and measured. It has laid the foundations for meaningful cooperation in this Parliament. And he made a series of installments to address key national and global challenges, including housing affordability, climate action, better health care and military capacity.
Prior to the budget, the Liberal government entered into a supply and confidence agreement with the NDP to provide important stability to our Parliament and achieve our many shared priorities. If the deal works, the only practical constraint to achieving our shared agenda should be our continued commitment to fiscal sustainability.
As fiscal season approached, in an inflationary environment that demanded greater caution, it remained to be seen whether this commitment to fiscal sustainability would hold.
In response, as former Parliamentary Budget Officer Kevin Page concluded, the budget was “surprisingly measured, modest and responsible”. This analysis was widely echoed by economists Sahir Khan and Brett House in a recent Uncommons podcast episode.
With economic growth generating $85 billion in additional fiscal room, Budget 2022 offered $31 billion in net new spending over 5 years ($62 billion in total new spending, half of which was offset by new taxes, cost reductions and reprofiling funds). The remaining $50 billion will reduce our deficit and provide fiscal sustainability and flexibility.
The debt-to-GDP ratio remains low relative to other major economies and a falling ratio remains the key fiscal anchor.
Carrying costs also remain low by historical standards and we have locked in low interest rates by issuing long-term debt.
In terms of new spending (spread over five years), the overall objective of the budget was growth and affordability:
• $12 billion for climate action, including work to develop clean electricity, protect nature, advance innovation and reduce emissions in transportation, buildings and agriculture.
• $5.5 billion to spur growth, including work to launch a critical minerals strategy, increase immigration, create an innovation and investment agency, and strengthen supply chains.
• $10.5 billion to advance reconciliation, including work to address past harms and discrimination against children, support health and education, and provide infrastructure – from housing to clean water – for indigenous communities.
• $5.3 billion to deliver on the new promise of dental care for families with incomes below $90,000 and set the stage for greater parliamentary cooperation.
• $10 billion to make housing more affordable, including work to provide a third round of fast-paced housing, build more co-op housing, support first-time buyers and establish an accelerator to encourage cities to increase supply much more rapidly.
• $7.2 billion to build military capacity and an additional $940 million to support Ukraine, including expansion of Operation UNIFIER and military assistance.
There were, of course, missed opportunities. We have set aside only $732 million for global vaccine equity (below our fair share) and only $100 million to address the opioid crisis (below our election promise of 500 millions of dollars). I expect others to have their own examples.
On several fronts, spending measures should be seen as down payments.
The provinces will continue to push for larger transfers for health care. We will need additional climate action on a credible path to net zero. Defense spending does not yet represent 2% of GDP. And on housing, the scale of the spending does not yet match the scale of the challenge on the supply side, and we are not yet addressing the excessive financialization of housing on the demand side.
A national early learning and childcare system will exist through bold government action and we need a similar level of ambition to meet our climate commitments and ensure the housing market does not leave a generation behind. whole behind.
It will not be an easy road to travel. Our finances will be tested by an aging population, and uncertainty in Ukraine and tighter monetary policy will affect the outlook for economic growth. If we are to see through all of our existing commitments (from the new disability benefit, to pharmacare, to NATO’s 2%), we will need a thorough review of government performance when it comes to current spending and a more serious conversation about taxation, especially extreme wealth.
But if this budget is any indication, whatever challenges lie ahead, we will remain committed to both social progress and fiscal sustainability.